Prime Collateralised Securities (PCS) - an industry-led, nonprofit initiative to develop a label for high quality securitisations – today marks its official opening with a series of high-profile Board appointments.
PCS has been set up to grant labels for high quality securitisations that meet best practice in terms of quality, transparency, simplicity, and standardisation. It expects to grant the first label in the next month.
The new PCS Board comprises:
- Francesco Papadia, former Director General for Market Operations at the European Central Bank
- Anneli Peshkoff, former Director of Treasury at the European Investment Bank
- Prof Jose Campa, former Secretary of State for the Economy in the Spanish Ministry of Economy and Finance
- Gregor Gruber, Allianz Investment Management, member of the Investment Management Board
- Gaelle Philippe Viriot, Head of ABS at Axa Investment Managers
- Richard Bartlett, Head of Corporate Debt Capital Markets and Risk Solutions, RBS
- Mirco Bianchi, Head of Group Finance, UniCredit
- Michaela Ulrici, Chair of the Board, NautaDutilh
- Ian Bell, Head of the PCS Secretariat
In addition to the Board appointments, the PCS Secretariat - which will grant and monitor the PCS label - has confirmed the Irish Stock Exchange, True Sale Initiative and KPMG as screening partners to assist it in checking key documentation.
Access to securitisation markets for issuers (corporates and banks) is increasingly important to overcome funding shortfalls for the real economy in Europe. Asset Backed
Securities can be an important instrument, especially as they do not use up the same credit line capacity as other investments, such as corporate and covered bonds.
Yet, despite the very strong underlying performance of European asset-backed securities since 2007, the smaller investor base and the reduced level of issuance are affecting companies reliant on capital markets, as well as Europe’s broader economic recovery.
The PCS initiative has been developed by a broad group of leading European finance professionals comprising issuers, investors, arrangers, and other market participants, in collaboration with other European industry associations, as well as observers such as the European Central Bank and the European Investment Bank.
PCS is more than just a positive label for eligible securitisations – it provides agreed market standards, as well as an enforcement mechanism of these agreed standards, based on a label which can be granted and withdrawn depending on compliance and as verified by the PCS Secretariat.
Ian Bell, PCS’s Head of Secretariat, commented:
“We are officially open for business and it’s exciting to be part of such an important initiative, which has seen so much support from investors, issuers and policymakers alike. The PCS initiative has received strong support from Europe’s key institutions, such as the European Central Bank and I am delighted with the level of experience on the PCS Board, which will be led by Francesco Papadia.
“Europe’s securitisation market is a necessary component of funding the growth that Europe so badly needs and the PCS label will go some way towards providing investors with the reassurance they need.
“We look forward to a constructive dialogue with policy makers on how we can help to support a strong and transparent securitization market in Europe. In this context we felt encouraged by the European Commission’s request to the European Insurance and Occupational Pensions Authority (EIOPA) – the pan-European insurance regulator - to revisit the capital charges imposed by Solvency 2 on insurers for holding securitised assets. For the sake of Europe’s economic recovery, let’s hope this is the beginning of a fruitful interaction.”
Newly appointed PCS Chairman Francesco Papadia added:
“The PCS label will bring quality, transparency and standardisation to the market, which will deepen the securitisation investor base in Europe and, in turn, improve overall liquidity. Europe needs a healthy securitisation market and we are confident that this initiative, alongside regulatory changes, will revitalise the market as a source of funding for the real economy.”
 Recent estimates show that €650 billion of senior unsecured and covered bond funding will mature in 2012 for European banks; for sovereigns, funding of over €900 billion will be needed and that an additional €1.5 – €1.9 trillion of funding is needed to power any growth. Sources: Bloomberg and BAML Global Research Dec 2011, Standard & Poor's May 2012.